ASXL1 plays key roles in epigenetic regulation of gene expression through methylation of histone H3K27, and disruption of ASXL1 drives myeloid malignancies, at least in part, via derepression of posterior HOXA loci. However, little is known about the identity of proteins that interact with ASXL1 and about the functions of ASXL1 in modulation of active histone mark, such as H3K4 methylation. In this study, we demonstrate that ASXL1 is a part of a protein complex containing HCFC1 and OGT; OGT directly stabilizes ASXL1 by O-GlcNAcylation. Disruption of this novel axis inhibited myeloid differentiation and H3K4 methylation as well as H2B glycosylation and impaired transcription of genes involved in myeloid differentiation, splicing, and ribosomal functions; this has implications for myelodysplastic syndrome (MDS) pathogenesis, as each of these processes is perturbed in the disease. This axis is responsible for tumor suppression in the myeloid compartment, as reactivation of OGT induced myeloid differentiation and reduced leukemogenecity both in vivo and in vitro. Our data also suggest that MLL5, a known HCFC1/OGT interacting protein, is responsible for gene activation by the ASXL1-OGT axis. These data shed light on the novel roles of the ASXL1-OGT axis in H3K4 methylation and activation of transcription.